The heart of the wise inclines to the right,
but the heart of the fool to the left

Wednesday, November 28, 2012

Redistribution and Times of Tempest

In a nation racing towards insolvency at the speed of a falling falcon, the state of Pennsylvania is worth a look. But first, some reality.

The redistribution of wealth by government entities has two consequences which are seldom discussed. First, the wealth must be removed from the hands of citizens who possess it. In our national system this means taxing people with income and profitable investments. Second, the confiscated wealth is utilized to encourage individuals without income or profitable investments to retain such vocations. In our rational world, we punish that which is productive and reward that which is not. Even bypassing the moral arguments against theft of wealth by the power of guns, this is a miserable set up and provides negative incentives to both parties of the transactions.

Take note of the following graphs from the Department of Public Welfare of Pennsylvania in conjunction with the American Enterprise Institute.

Exhibit A: The income curve of a Pennsylvania family of a single mother and two children. The red line indicates the level of earnings. Blue bars indicate net earnings and are representative of take home pay and benefits following Federal and State taxes. Notice that while a progressive tax rate is active, it is in all cases better to increase earnings.

Exhibit B: The income curve of a Pennsylvania family of a single mother and two children. Note the remaining red income line and the blue area of net income. Note also the stark level of redistributed wealth. The dashed horizontal line is important, as this individual earning $29,000 per year will rationally refuse any increase in income, unless such income were to exceed $69,000 per year.

Exhibit C: The outcome of increased redistribution of wealth. The programs we collectively call welfare are not the only source of redistributed income, wealth producers are subject to an additional form of exploitation. Government employees are paid from this same pool of forcibly collected wealth. At this very hour there are only five privately employed wage producers for every 4 individuals collecting from this sour pool of redistributed wealth. For a look at the growth of government employment in comparison to the growth in private employment, look at slide 14.

Clearly there is room for disagreement on the role of government and the level of employment under the banner of the government system, but there ought be no dispute that every dollar used to pay the wages of government employees is that which stems from taxation or excise. My umbrage is not with the individuals who have rationally chosen work within the government apparatus, but with the apparatus as it exists and from where the resources for it's existence are derived. Can it happen here? Will the motor continue to turn? Have we passed the event horizon?

Big questions with no easy answer, and the sky continues to darken uncomfortably. It was without error when Romney declared 47% of the electorate would be firmly opposed to a candidate who even pretended to rearrange this acrimonious construct. We may be watching as that 47% swiftly surpasses the 50% mark over the coming two years. The political firepower simply does not exist on a national level* to reduce the spending on these any policy. The rational and expected action of an elected official at this time is to encourage redistribution of wealth just as Senators of Rome pursued headlong the panem et circenses politics of the republics latter days.

The time is past and present to remedy this insult to human dignity. We must no longer sanction the punishment of the productive on behalf of the collective society. Equally important is to restore the hope that comes when an individual is capable of improving themselves. It is implausible to believe that a single mother with receive a promotion from $29,000 a year to $70,000 a year. Short of that pay rate, she is told that her most valuable place in society and for her children is to earn less then $30,000 year. In the desire to provide for a low income family at the expense of others, we have managed to strip away hope and pride and desire for personal and professional improvement.

Irrevocably and predictably our solution falls once again upon the shoulders of the individuals who make the teeming mass of people we call Americans. Will the hearts and minds of the people change to alter the course we are set on? Human history is rife with societies who have quibbled over the gold on a sinking ship, but of equal abundance are ships righted in times of tempest. May God be with us.*(Ryan, Gowdy and Paul notwithstanding)